Malaysia Finalizes Free Trade Agreement with South Korea
Malaysia has successfully concluded negotiations for a free trade agreement (FTA) with South Korea, with the official signing ceremony expected to take place in October. The significant announcement was made by Investment, Trade and Industry Minister Tengku Datuk Seri Zafrul Aziz during a fireside chat at Bursa Malaysia’s prestigious Invest Malaysia event. The minister highlighted that this new agreement is a testament to Malaysia’s proactive approach to international relations, reflecting its continued efforts to engage with global partners to secure broader market access. This strategy is seen as particularly crucial in an era of heightened geopolitical uncertainty. The minister also noted that Malaysia has now concluded a total of 18 FTAs, a mix of both bilateral and multilateral agreements, demonstrating the country’s strong commitment to its trade-centric foreign policy and its resilience in the face of evolving global dynamics.
Navigating Geopolitical Tensions with a Neutral Stance
When questioned about Malaysia’s engagement with BRICS in light of perceived pressure from the US, Minister Tengku Zafrul emphasized the foundational principle of Malaysia’s foreign policy: remaining consistent and engaging all countries on equal terms. He stated that Malaysia’s approach is to work with all nations, noting that many current members of BRICS are also part of other major economic blocs. This reflects a pragmatic and inclusive strategy. The minister also underscored the importance of Malaysia maintaining a neutral position, a stance he believes the ASEAN bloc as a whole is managing effectively by engaging with all global powers. This diplomatic approach allows Malaysia to protect its national interests and economic partnerships without being forced to take sides in complex international disputes.
Strategic Response to Trade Challenges
In his keynote address, the minister also addressed key challenges facing Malaysia, particularly those impacting the nation’s critical electrical and electronics (E&E) sector. He highlighted concerns over the proposed imposition of a 100% tariff on imported semiconductor chips and the complex issue of transshipments. These risks are particularly significant given that the United States remains a core market for Malaysia’s E&E goods. In 2024 alone, Malaysia exported RM119.86 billion worth of E&E products to the US, with a substantial RM60.6 billion of that value coming from semiconductors. To mitigate these threats, Tengku Zafrul confirmed that the government is actively engaging with Washington to secure clear and fair sectoral carve-outs, while also working closely with industry players to verify product origin, diversify markets, and boost local value-add in production.
